Talwalkar Better Value Fitness- December 2012 Results

Talwalkars Better Value Fitness announced it December 2012 quarter results. On a consolidated basis, the company has posted a topline of Rs 28.80 crore and a bottomline of Rs 3.40 crore, as against Rs 24.40 crore and Rs 2.30 crore respectively for the December 2011 quarter. This results in a topline growth of 18 per cent and a bottomline growth of 46 per cent. The results are not comparable on a sequential basis as the September quarter always includes the annual discount scheme.

As regards the operational performance, with an increased realization, the EBITDA margins for quarter improved to 37.15% from the levels of 35.65% in December 2011. A noticeable factor is that the interest cost has gone up significantly by 80% to Rs 3 crore. This clearly indicates towards higher debt levels. Apart from this, the company has raised Rs 42.37 crore through QIP (Rs 205.18 per share).

Expanding further, the company has added 9 fitness centres since Q4FY12. Talwalkars and its subsidiaries have also acquired 4 fitness centres in Pune. Over the next 90 days, the company expects to add 10-14 more fitness centres. As on December 31, 2012, the total number of centres stands at 137 with a presence in 73 cities. The number of owned centres are 95, 13 are subsidiaries, 13 are franchises and 14 are Hi-Fi. The number of members stands at 1, 32,000.

For the 9MFY13, the topline stands at Rs 113 crore and the bottomline at Rs 17.90 crore. If the company wants to achieve the target of 40% sale growth in FY13, the March 2013 quarter should be a stunner.  The management has, however, stated that the March quarter usually turns out to be a better one with a contribution of 40% to the yearly sales.

We feel that the target is quite achievable, with the company planning to open 10-14 additional centres in the next quarter. The overall results have been in line with the street expectations and we, therefore, recommend investors to hold the counter.